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WHICH POLICY IS RIGHT FOR YOU?

DO YOU NEED TERM OR WHOLE LIFE INSURANCE?  

Knowing which type of policy is right for you, is the first step in purchasing coverage. There are two main types of life insurance (whole life and term). To know which policy is a better choice, for your particular situation, is to know where you are in life. Are you still working a full-time job? Do you have someone who depends on you financially? If you have a home with a mortgage attached and if something were to happen to you today, would your loved ones still be able to live in that home without the worry of foreclosure? Or maybe you don't have a mortgage, you are renting. Either way, it is still where you call home. And if you share that home with your children, spouse or other family members, you want these people to be taken care of in the event of the inevitable. Think of it this way, this policy is not for you, it's for them.......the people  you love.

Term insurance is not as expensive as whole life insurance. You can get more for less for an extended period of time (10, 15, 20, and 30 years), up to age 65, usually not over the age of 70. If you work a job, most employers will offer it to you with other benefits. Should you just settle for what you have on the job? Well, do you plan on staying at that particular job for a long time or at least until retirement? Also, is the amount offered enough or do you need more coverage? Keep in mind, once you retire, if you have not already bought insurance from a private company away from the job, your life insurance policy will end, you will have no coverage. To calculate how much life insurance is needed......you must multiply your yearly income/salary by how many more years you have until retirement.

I will use myself as an example. As a certified nursing assistant, for the year of 2019, I grossed an income of around $50,000. At least that's what it said on my tax return. I had to work two jobs and a lot of overtime hours to get to that point, but I did it.....true story. Back to calculations, I am 49, if I work until age 65.....that is 16 working years left for me. So I would need to multiply $50,000 by 16 years, this would leave a some of $800,000. To make sure that my loved ones are taken care in the event of my death, I will need as much as $800,000 in life insurance coverage. Keep in mind, the younger you are......the cheaper the policy will be.

Of course, most, if not all, insurance companies will not write a term policy on a child or someone under the age of 20. Because term insurance is more suitable for adults still holding down a job or career of some sort and who have families and responsibilities, or at least for someone who has someone in their life....they love and want to leave that person a large sum of money or financially comfortable. Did you know that insurance has been used, over the years, by the wealthy for building wealth for their children and grand children? They would do this by purchasing a large whole life policy and leave it to them.

Now let's just say you are in a different frame of mind, you are not as concerned with leaving your family with a big sum of money at your expense. You just simply don't want to leave any type of financial burden on the people you love. You don't want them to have to come up with the funding out of money they may not have to put you away nicely. You would not want them to have to put up a "GoFundMe" account, or raise money by selling lunch plates, or take donations through however means neccessary. Most people who have a heart, would not want this to happen. If you are just simple looking for final expense or burial coverage, a basic whole life policy is all you need, at least $7,000 to $10,000.

Also, don't forget about those family members who don't care either way. However, if something were to happen to them, would it put you in a financial bind? Would you be the one who would have to foot the bill for burial cost? If the answer is yes, then what are you waiting for on getting that person a life insurance policy? Keep in mind, there must be an insurable interest. Meaning, I can't go take out a policy on the life of my neighbor and expect to receive a financial gain at his/her demise. The insurance company would surely have the police at my front door. It has to be someone whom you know would bring a financial burden upon you....at their passing. 

Written by Veronica Sain

 

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